Britain’s Looming Housing Crisis

by Mark Alexander - Founder of Property118

9:11 AM, 19th November 2011, About 13 years ago 3

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With people living longer and with less people per household, it is pretty obvious that more housing is needed. But that’s just the tip of the iceberg.

The Office of National statistics has predicted that the UK population will grow to 71.6 million by the year 2033.

But where will they all live?

Speaking with the experience of being a private landlord since 1989 and having been the MD of one of the UK’s largest mortgage brokerages I regularly get involved in debates about availability of mortgage finance, rising rents and rogue landlords. However, these are just symptoms of a much larger problem.

To accommodate this growth we need to build enough houses to create a City the size of Birmingham!

The Private Rented Sector is under pressure to grow to accommodate the problem and mortgage lenders are under pressure to lend. If we waved a magic wand and made those things happen, the only thing that would change is house prices. They would increase while demand would remain a problem.

We can’t create more land but the red tape could be cut to make more land available for development. Would the builders build though if only the lucky few could raise finance to purchase the properties? Also, if the balance between supply and demand for housing was altered significantly without the ability and incentive for newly built properties to be purchased, that could further destabilise the housing market.

In my city (Norwich) huge developments have been mothballed for up to three years. I have heard similar stories across the UK. What is the Government doing to incentivise builders to complete these developments? What is being done to incentivise home ownership or the expansion of Private Rented Sector? We all know the answer to that one, that’s why NOTHING is happening.

My conclusion, therefore, is there needs to be a fine balance of release of land, incentives to develop and ability to purchase. The result of getting the balance wrong will result in either a massive property price boom or a crash in property values and huge increases in rents and homelessness. Campaigns to deal with rogue landlords will continue to be futile unless the balance between supply and demand is equal. Unless more housing is developed, choice of housing will become even more scarce. Everybody deserves safe housing, increasing supply is the only way to provide people with choice.

This is my opinion though, what’s yours?

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Mark Alexander
Mark and his family have been investing in property since 1989, initially in the Norwich area but more recently across the length and breadth of England. Mark created Property118.com as a social network for landlords with a vision of becoming the UK’s largest online property investor directory.
Mark’s experiences and strategies as a landlord are shared here

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Tags: bridging, broker, commercial, Development, finance, funding, Housing market, Investing, Landlord news, mortgage, Private Rented Sector, Property blog, Property investment, Property Investor, Property management, Property Market News, property value, residential, Rising Rents, Rogue landlords, Strategies, Strategy

Comments

10:20 AM, 21st November 2011, About 13 years ago

A housing stock shortage, lack of jobs, rising rent and huge deposits needed to purchase a house and the average age of a first time buyer in the UK is now 43; Britain runs the risk of becoming even less competitive than it already is on the World stage.

What incentive is there for our talented youth and young professionals to stay in the UK and help build our economy?
More likely they will be looking further afield to places like Australia where the prospects and outlook certainly seem brighter!

As a Cardiff lettings agent business is booming, but how long can this rent bubble go on for? Without major affordable housing projects across the UK, rents will continue to rise; it will be harder for Britain’s young to save a deposit, the average age of a first time buyer will increase and ultimately less incentive for out future talent to remain in the UK.

Once again unless more affordable housing is built we are in a situation of “boom” or “bust.

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Matchmade

11:30 AM, 22nd November 2011, About 13 years ago

As a small-scale property developer I know full well why not enough housing is being built: a lack of land, a deeply conservative planning system (and existing resident public) that costs a huge amount to battle through, a hostility to "garden grabbing" (a.k.a. more efficient use of existing land) and presumption now in favour of large estates on land controlled by the big firms, a lack of development finance to supplement my own capital, and an inability of buyers to raise enough deposit.

On top of this, the costs to build keep increasing as we move to zero-carbon homes: all the requirement for this is being placed on new homes, whereas existing home owners are required to do absolutely nothing to help with global warming. And on top of this, developers have to pay £20K per house in S106 taxes for new infrastructure, again with existing homes and businesses not paying a penny towards all the new schools, roads, playgrounds and so on they're receiving.

And finally, worst of all, new private homes are unaffordable because they also have to cover the cost of so-called affordable homes: for every five houses built, two have to be given away to a housing association! The Government gets a completely free ride off private housebuilders and buyers, and they wonder why housebuild levels are so low. The big developers have to keep the supply of new houses low and the prices high, to pay for all these extra costs and to pay for all the social housing given for free to people who live off the state and contribute nothing to society.

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Mark Alexander - Founder of Property118

11:34 AM, 22nd November 2011, About 13 years ago

Totally agree, very well written too. Thanks for sharing your thoughts.

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